In the first public news I am aware of since we mentioned in July (see: Changes Coming at Omnyx – Developing Story), the Pittsburgh-Post Gazette reported yesterday that “Omnyx Ends UPMC affiliation, closes Homestead headquarters“. The story reports that “Digital pathology company Omnyx LLC will be folded into GE Healthcare at the end of the month, ending an eight-year partnership with Pittsburgh hospital system giant UPMC to commercialize a nascent technology.”
CEO Andy Chomos was quoted as saying that “regulatory uncertainty” was a “strong contributor” as was “the business was very expensive to maintain”. This combined with citing “…variable global demand” has resulted in Omnyx’s decision to close operations at their headquarters near downtown Pittsburgh. A Toronto office and one in New Jersey were closed in 2013 and 2015, respectively.
One of the many exciting developments in the past 7 years has been the level of investment being made by the likes of large global healthcare manufacturers such as Leica, Philips, Roche and Sectra, among others. GE Healthcare’s investment in this space going back to 2008 appeared to signal further validation that digital pathology was increasingly being recognized as a technology that would become part of routine use in laboratories. The academic and industry collaboration, as I mentioned in July, was particularly exciting for pathologists such as myself as a consumer of the technology.
Certainly the loss of GE Healthcare and the collaboration with UPMC as Omnyx is not positive for the industry. The loss of a “large player” in an emerging industry with a change of business strategy here is not reassuring for the industry at large. Omnyx was the first company in GE’s history to be formed with an academic medical center and represents an aim to accelerate ideas to market through enhanced co-development (see: GE and University of Pittsburgh Medical Center Launch New Business to Digitize and Revolutionize Disease Detection).
That being said, this may speak to GE Healthcare’s general interest and experience in the laboratory market over the past 6 years that has had other issues, including the purchase of Clarient at the end of 2010 for reported $580 million (and perhaps as high as $650 million) which was sold 5 years later to Neogenomics for a reported $275 million. The purchase of Clarient at the time coincided with sharp cuts in reimbursements for technical laboratory services which was a significant portion of Clarient’s business model. It also seemed that Omnyx could not leverage this relationship with Clarient, announcing a collaboration in early 2015 (see: GE Healthcare Building a Stronger Network in the Fight Against Cancer), with the sale of Clarient to Neogenomics coming 7 months later. Perhaps had their investment in a laboratory provider been different that incorporated Omnyx technology, this story may have a different ending.
As we mentioned in July, GE Healthcare confirmed plans were in place to support existing customers and honor contractual commitments.